Inward Processing Relief

Inward processing relief (IPR) can best be explained by means of an example. Suppose a manufacturer has to buy goods from outside the EU for the company’s production process, and the final goods will be exported to a customer located in a country outside the EU. As the manufacturer has to pay import duties on the imported goods, the production process in the EU becomes more expensive and thus less competitive. The EU, however, wants to facilitate this type of production and keep it competitive compared to other manufacturers outside the EU.

Manufacturers in the EU can, therefore, apply for IPR authorization, which gives them the option to declare the goods on import without paying import duties. However, the manufacturer has to prove that the manufactured goods that incorporate the imported goods will be exported.

An IPR authorization can be very interesting for manufacturers with global clients. However, it is a permit, which requires a careful administration. A permit can be obtained for a single shipment or for a continuous flow of goods. In practice, it is a rather tricky permit, because customs are very keen that all formalities are strictly fulfilled.